Promoting Heating Sector Decarbonization and Renewable Heat Integration

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1.The proposed technical assistance (TA) aims to modernize Azerbaijan's heating sector by advancing efficiency, sustainability, and decarbonization. It will enhance space heating services (and potentially cooling), promote the integration of renewable energy through a small-scale pilot project, and strengthen the policy and regulatory framework. Key outputs include the development of a National Heating Strategy and the drafting of a new Heat Law, with a focus on updating regulatory instruments such as the heat tariff methodology. The TA will also assess the performance of Azeristiliktechizat OJSC (AIT), Azerbaijan's primary state-owned heating operator, and provide actionable recommendations to improve corporate governance, optimize business processes, reduce reliance on state subsidies, and enhance operational commercialization.